Practice Areas

CBP Planning to Launch Pilot Program on Containers with Cargo Residue This Year

Friday, April 26, 2013

Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection officials recently said they hope to begin by October a pilot program aimed at easing the requirements associated with the entry of containers with cargo residue.

In July 2009 CBP modified all earlier rulings to provide that re-imported instruments of international trade (containers) made of any material that have residues of any type of cargo may not be entered or manifested as empty and that the cargo residue contained, regardless of the amount, must be classified, entered and manifested. CBP said this policy change was intended to address risks to national security and the health and safety of its officers. The agency acknowledged trade community complaints about the effect of this change, including the expense of compliance, increased border congestion and challenges in providing accurate information, by subsequently delaying enforcement indefinitely.

CBP is now moving toward launching a pilot test that will provide new procedures and guidance on how to manifest and, if necessary, enter containers with residual cargo. A draft Federal Register notice states that under this pilot containers with cargo not exceeding a certain percentage of the container’s total capacity by weight or volume (7% for rail, 5% for air, and 3% for truck and ocean) would have to be manifested as having residue rather than as an empty container unless they are, in fact, completely empty. Officials say CBP would not weigh or measure containers to verify the amount of residue present but instead would accept declarations by carriers, since the above amounts are the same limits below which carriers do not charge for carrying freight. If the cargo residue has no commercial value (i.e., the container will be either cleaned with the residue destroyed or re-filled for export), CBP would:

- accept the declaration of the carrier, or the importer of record if other than the carrier, that the residue has no commercial value (zero value, or $1 for truck or air shipments reported through the Automated Commercial Environment) and the country of origin is the country from which the container is arriving;

- require that the type of residue be described; and

- require a residue entry (made under 19 USC 1321, so no merchandise processing fee would be due) designating that the cargo residue has no commercial value.

For purposes of the test, the carrier would have the right to make informal entry on the residue and entry could be made off the manifest with no further documentary requirements if the commercial value is below the set limits.

Containers with residue levels above the specified amounts would have to be manifested and subject to formal or informal entry, depending on the value of the residue.

CBP officials say this test would use existing functionality so virtually no programming changes would be needed. In addition, there would be no application process so interested parties could begin participating in the pilot whenever they like. There would be no additional bonding requirements, and Air Cargo Advance Screening filings would not be required for containers with residue in the air environment.

CBP is hoping to finalize the Federal Register notice in May and then secure interagency approval, which is expected to take several months. Officials say the pilot will begin 30 days after the notice is published and that there will be a 60-90 day informed compliance period once the pilot is underway. Participation in the pilot will be voluntary, but those not participating will have to make formal entry for any cargo container with any amount of residue.